What a sources and uses table shows
Uses are everything the deal costs: the purchase price or land, closing costs, the renovation or construction budget, loan fees and any reserves. Sources are where the money comes from: the senior loan, any mezzanine, seller financing and the sponsor’s equity. The two totals must match.
Lenders read it first to see total cost, how much equity is going in and where it ranks. Each source’s share of total cost is its loan-to-cost, which is how construction and bridge lenders size. See sources and uses statements explained and LTV and LTC.
Getting it right before a lender sees it
- Include every cost. Closing costs, lender fees, third-party reports, interest during renovation or construction and working capital all belong in uses. Lenders add them if you leave them out, and the equity requirement rises.
- Show contingency. A renovation or construction budget without a contingency line reads as incomplete. Five to ten percent of hard costs is typical.
- Separate the equity. Show cash equity apart from any land contributed at its appraised value, since lenders and bank capital rules treat them differently.
- Match the loan request. The senior loan on this table should be the amount in your request. If they differ, the lender will ask which is right.
Frequently asked questions
What is a sources and uses table in real estate?
A one-page summary of what a deal costs and how it is paid for. Uses list every cost; sources list each loan and equity contribution. Total sources must equal total uses.
Do lenders require a sources and uses statement?
Almost every acquisition, construction and refinance request includes one. It is usually the first page a lender reads after the property summary.
What belongs in uses on a refinance?
The payoff of the existing loan, prepayment or exit costs, closing costs, lender fees and any reserves or cash out to the owner.
How is loan-to-cost calculated?
The loan amount divided by total uses. A $10.5 million loan on $15 million of total cost is 70% loan-to-cost.